Russia's economy under pressure: sanctions lead to drastic cuts!

Russia's economy under pressure: sanctions lead to drastic cuts!

Russia's economy is facing significant stress, compounded by new Western sanctions, particularly from the United Kingdom. These sanctions primarily target oil and gas sales, which are central to Russian revenues. According to a report by fr.de the Russian government is forced to drastically reduce investments in various sectors.

Current developments clearly show that Russian state revenues are under pressure. The price of oil, originally estimated at around $70 a barrel, has fallen to below $50. As a result, investment programs for key sectors such as aviation, ship production and the high-tech industry will be significantly reduced. According to a report, aviation development will be cut by 22% to 78.8 billion rubles (about 868.75 million euros), while the high-tech sector will suffer losses of 46 billion rubles (about 507 million euros). op-online.de reports similar challenges related to revenue from oil and gas sales.

Drastic cuts in industry

The automotive industry will face cuts of 35 billion rubles (about 385.8 million euros), while the transport sector will see cuts of 25 billion rubles (about 275 million euros). In addition, the Russian statistics agency Rosstat reports significant declines in economic growth, which further illustrates the overall critical situation.

An internal report from the Foreign Office shows “significant” effects of the sanctions on the Russian economy. The EU has adopted a 17th sanctions package that, among other things, discusses tariffs on Russian fertilizers. The pressure on Russia is growing, not least due to progress in controlling the export of war-related goods via third countries such as Armenia, Serbia and India. These efforts are aimed at preventing sanctions evasion.

Shadow fleet and delivery difficulties

Another area of ​​concern is the so-called “shadow fleet,” which consists of aging ships operating under false flags to evade Western sanctions. The EU has begun to monitor this fleet more closely and some states are withdrawing flags from the ships. However, there has been little success in efforts to prevent countries such as Kazakhstan, the UAE and Turkey from helping Russia evade sanctions. China in particular is responsible for around 80 percent of sanctions evasion, but denies any complication.

In addition to these challenges, US President Donald Trump hinted at new sanctions against Russia on May 26. This possible escalation of sanctions could be a response to Russia's ongoing aggression against Ukraine, which Trump has previously criticized on several occasions. Still, it remains to be seen how effective these new measures against the Russian economy can be, especially given the improvements in relations between Trump and Russia so far.